Summary
To take advantage of Myanmar's opening to the world and its deliberate rebalancing away from a
near-exclusive relationship with China,
New Delhi will probably need help. As Myanmar's neighbor and one of
Naypyidaw's options for diversifying its foreign relations, India has
three interests related to the country: quelling ethnic militancy along
the Indo-Myanmar border, integrating its remote northeast region and
increasing its energy production to meet domestic demand. However,
India's excessive bureaucracy and various other complications have
hindered its ability to make substantial moves in Myanmar. Therefore,
any robust Indian involvement in Myanmar will likely require cooperation
with and even financial assistance from other countries with strategic
interests in the region.
Analysis
Over
the past few decades, with Myanmar focused on domestic issues and
secluded from the West and with India distracted by internal matters,
China gained a strong foothold in its Southeast Asian neighbor.
Recently, however, Myanmar has sought to break out of its international
isolation and reduce its dependence on China.
Historical Interests
Like Beijing, New Delhi has geopolitical interests in Myanmar, revolving
around India's isolated and underdeveloped northeast region. From 1885
to 1942, India and Myanmar (together with what are now Bangladesh and
Pakistan) were consolidated under British colonial rule. When
Bangladesh, as part of Pakistan, broke off from India in 1947, the seven
northeastern Indian states remaining became separated from the
mainland, connected by only the narrow Siliguri Corridor, which runs
between Nepal and Bangladesh. When Myanmar gained independence from
Britain in 1948, it formally separated from India as well. Since then,
New Delhi has struggled to govern its northeast region.
For
India, the northeast is a vital buffer against invasion from the east.
However, New Delhi's only access to the region is through the Siliguri,
the lone highway in which is prone to flooding and closures. Since India
has a tenuous relationship with Bangladesh (the most logical point of
access to the northeast), it is advantageous for New Delhi to cultivate
relations with Naypyidaw to retain control over the remote territory and
keep the buffer intact. Such relations are particularly important if
India is going to exert authority over the region's various tribal
communities, whose secessionist movements often erupt into violence.
Indeed, Myanmar is also wary of the prospect of an insurgency raging in
its periphery. Insurgency-related violence along the border has
decreased in recent years, likely stemming in part from the countries'
coordination and intelligence-sharing efforts, but it is unclear if
these gains will endure or if further security measures will be
attempted.
India's
interests in Myanmar go beyond finding help to control rebellious
ethnic groups. India's population of 1.2 billion people is growing, and
parts of the northeast region are outpacing the rest of the country by
up to 10 percent. Energy needs are becoming more critical, yet India's
energy supplies consistently fall short of demand across the country. New Delhi's Look East policy
posits that the northeast, with an estimated hydropower capacity of
60,000 megawatts, could become an important source of power generation
for the rest of the country. However, the region currently produces only
about 1,200 megawatts of renewable energy and faced a power deficit of
almost 1,000 megawatts at peak demand in 2012. Furthermore, a number of
hydropower projects in the region have encountered crippling delays, and
the area lacks the infrastructure to transmit its renewable energy
elsewhere in the country.
Myanmar,
meanwhile, has 200 billion cubic meters of proven natural gas reserves
(with 12.4 billion cubic meters currently in production annually) and
500 million barrels of oil reserves -- not a great amount by global
standards, but adequate to help supply regional markets. Currently, all
8.6 billion cubic meters of Myanmar's annual natural gas exports go to
Thailand, and the Sino-Myanmar pipeline will soon take additional
reserves to China's Yunnan province. Although India did, in fact,
attempt to build a pipeline from the port at the Myanmar city of Sittwe
through northeast India and Bangladesh to Kolkata in the early 2000s,
disagreements with Bangladesh caused negotiations to collapse. As a
result, cross-border infrastructure would still need to be built for New
Delhi to tap into Myanmar's resources substantially -- whether to
supply the northeast or to transport to Kolkata.
India's Projects in Myanmar
Despite
small-scale successes -- such as Jubilant Energy's production-sharing
agreement to develop Myanmar's PSC-1 onshore oil and natural gas block
and Tata Motors' deal to supply commercial vehicles to Myanmar -- most
of India's large-scale projects in the country are not faring well. Its
most elaborate project, the Kaladan Multi-Modal Transport network, is
taking years to come together and continues to encounter problems.
Agreed on in April 2008, this river and road system is supposed to
connect the Sittwe port with India's northeast to make the
transportation of goods more cost-effective and open up a new market for
Indian products in Myanmar. But all three phases of construction --
developing the Sittwe port, dredging the Kaladan River and building a
highway to connect the river with India's Mizoram state -- are running
as much as a year behind schedule, and the entire project is at least
$14 million over budget (some estimates put its cost as high as $214
million instead of its original $120 million appraisal). Completion is
expected by 2014 or 2015.
Additionally,
while India has two state-owned companies (the Gas Authority of India
Ltd. and the Oil and Natural Gas Corp.) involved in the operation of
Myanmar's largest offshore oil and natural gas field, it lost the
contract to purchase the natural gas when the India-Bangladesh-Myanmar
pipeline fell through. China ended up with the purchasing rights and
expects its Sino-Myanmar pipeline to go online by June 2013. Meanwhile,
India's National Hydroelectric Power Corp. was involved in building two
hydroelectric dams on Myanmar's Chindwin River: Tamanthi, with an
expected capacity of 1,200 megawatts, and Shwezaye, with an expected
capacity of 880 megawatts. But the company recently submitted a report
saying Tamanthi is financially unfeasible and Shwezaye is technically
unviable.
Obstacles and Opportunities
Although India could use Myanmar's opening to become a bigger player in Southeast Asia -- something the
United States
and others are interested in seeing happen -- India's internal
constraints will allow it to do only so much in the neighboring country.
India's
excessive bureaucracy has hindered efforts to build even domestic
energy facilities, and the country's infrastructure cannot support its
booming population. In the northeast, construction on a number of
hydropower projects has been delayed or stopped completely due to rising
costs, difficulties dealing with the weather and the terrain, and local
unrest. Given the geographical connections between India and Myanmar --
a series of mountain ranges that reach higher than 1,800 meters
(roughly 6,000 feet) -- any infrastructure project that aims to connect
the two countries will likely face similar difficulties and have limited
capacities.
However,
India could get involved in Myanmar's opening by taking advantage of
the interests of other countries. Thailand is already vested in
infrastructure projects in Myanmar, including a deepwater port and a
special economic zone in the southern city of Dawei, as well as a
highway linking border towns with Yangon. Japan also recently increased aid to Myanmar and
is considering investing in the Dawei projects. Meanwhile, Vietnam has
pledged to expand cooperation with the country, and U.S. companies are
reportedly mulling involvement in the Myanmar oil and natural gas
industry.
The
involvement of such countries suggests that Myanmar's opening will be
at least somewhat successful, and India could pursue joint partnerships
that would allow it to gain a more substantial foothold in the country.
Until then, India's ability to develop stronger economic and political
ties with Myanmar will remain limited.
Copyright Stratfor Global Intelligence
